Traderji.com


Simultaneous long and short in same stock

Discuss Simultaneous long and short in same stock at the Equities within the Traderji.com; My question is simple-- Is it illegal to take long and short and short positions ...


Go Back   Traderji.com > THE MARKETS > Equities


Equities Discuss & analyse stock market news, views, trends and your favourite stocks here.


Reply
 
Thread Tools
  #1  
Old 21st February 2010, 05:37 AM
Member
 
Join Date: Jan 2009
Posts: 6
Thanks: 6
Thanked 2 Times in 2 Posts
mrwindmill is on a distinguished road
Default Simultaneous long and short in same stock

My question is simple-- Is it illegal to take long and short and short positions in the same stock at the same time?
I am asking this because of the decision on the case regarding Shankar Sharma who was banned for (among other things, maybe) selling and buying the same stock at the same time.

After all, isn't it very similar to a 'straddle' strategy in options? At times it is obvious there will be a big move, but can be either way. Whether one profits or not will depend on the stoploss, obviously.

Now, my question is--
1. Will a smalltime trader be barred for opening both long and short intra-day positions in an stock at the same time?
2. Where are these laws/rules guiding trading defined?

Regards, and sincere thanks for taking time to answer this.


Advertisements

Reply With Quote
Advertisements
  #2  
Old 21st February 2010, 08:48 AM
Member
 
Join Date: Aug 2009
Posts: 1,050
Thanks: 904
Thanked 1,558 Times in 608 Posts
trader.trends has a brilliant futuretrader.trends has a brilliant futuretrader.trends has a brilliant futuretrader.trends has a brilliant futuretrader.trends has a brilliant futuretrader.trends has a brilliant futuretrader.trends has a brilliant futuretrader.trends has a brilliant futuretrader.trends has a brilliant futuretrader.trends has a brilliant futuretrader.trends has a brilliant future
Default Re: Simultaneous long and short in same stock

Quote:
Originally Posted by mrwindmill View Post
My question is simple-- Is it illegal to take long and short and short positions in the same stock at the same time?
I am asking this because of the decision on the case regarding Shankar Sharma who was banned for (among other things, maybe) selling and buying the same stock at the same time.

After all, isn't it very similar to a 'straddle' strategy in options? At times it is obvious there will be a big move, but can be either way. Whether one profits or not will depend on the stoploss, obviously.

Now, my question is--
1. Will a smalltime trader be barred for opening both long and short intra-day positions in an stock at the same time?
2. Where are these laws/rules guiding trading defined?

Regards, and sincere thanks for taking time to answer this.
In a single account you can either be long or short not both in spot segment. FNO offers you the luxury to have a neutral position in many ways. Long in current month and short in next month contracts or like you mention straddle.

In spot if you are long 100 shares, then if you short 150 shares, you will be net short 50 shares. One way to get around it if you want to do it intraday, is long in delivery and short in intraday and later convert one to the other depending on your outlook.
Reply With Quote
The Following User Says Thank You to trader.trends For This Useful Post:
mrwindmill (21st February 2010)
  #3  
Old 21st February 2010, 09:00 AM
now now is offline
Member
 
Join Date: Jan 2010
Posts: 75
Thanks: 69
Thanked 61 Times in 34 Posts
now will become famous soon enough
Default Re: Simultaneous long and short in same stock

Quote:
Originally Posted by mrwindmill View Post
My question is simple-- Is it illegal to take long and short and short positions in the same stock at the same time?
I am asking this because of the decision on the case regarding Shankar Sharma who was banned for (among other things, maybe) selling and buying the same stock at the same time.

After all, isn't it very similar to a 'straddle' strategy in options? At times it is obvious there will be a big move, but can be either way. Whether one profits or not will depend on the stoploss, obviously.

Now, my question is--
1. Will a smalltime trader be barred for opening both long and short intra-day positions in an stock at the same time?
2. Where are these laws/rules guiding trading defined?

Regards, and sincere thanks for taking time to answer this.

if you are talking intraday , then if you buy 50 shares of reliance and then shorted 100 shares of reliance , than your account will show net 50 shares as minus , which is fine , as at point you were bullish on reliance and then you turned bearish intraday,
if you are talking delivery , then if you are holding 50 shares of reliance in delievery and then you shorted 100 shares of reliance , so you are being on bearish on reliance for that day , you will buy back the shorted 100 shares by the close
i have done both of the above things .
I think the reason shankar sharma was banned beacause he was trying to manipulate the price by buying and selling at the same point .
Reply With Quote
  #4  
Old 21st February 2010, 11:49 AM
Member
 
Join Date: Aug 2008
Posts: 93
Thanks: 336
Thanked 89 Times in 47 Posts
SCION will become famous soon enough
Talking Re: Simultaneous long and short in same stock

Arbitrage.
Attempting to profit by exploiting price differences of identical or similar financial instruments, on different markets or in different forms. The ideal version is riskless arbitrage.
you can be long in nifty and short mini nifty....you can go long in bse and short in nse for intraday or can use futures contracts in nse....


Quote:
Originally Posted by mrwindmill View Post
My question is simple-- Is it illegal to take long and short and short positions in the same stock at the same time?
I am asking this because of the decision on the case regarding Shankar Sharma who was banned for (among other things, maybe) selling and buying the same stock at the same time.

After all, isn't it very similar to a 'straddle' strategy in options? At times it is obvious there will be a big move, but can be either way. Whether one profits or not will depend on the stoploss, obviously.

Now, my question is--
1. Will a smalltime trader be barred for opening both long and short intra-day positions in an stock at the same time?
2. Where are these laws/rules guiding trading defined?

Regards, and sincere thanks for taking time to answer this.
Reply With Quote
The Following User Says Thank You to SCION For This Useful Post:
columbus (21st February 2010)
  #5  
Old 21st February 2010, 11:59 AM
columbus's Avatar
Member
 
Join Date: Mar 2008
Location: Hyderabad
Posts: 9,182
Thanks: 7,144
Thanked 15,009 Times in 6,231 Posts
columbus has a reputation beyond repute
columbus has a reputation beyond repute
Default Re: Simultaneous long and short in same stock

Quote:
Originally Posted by SCION View Post
Arbitrage.
Attempting to profit by exploiting price differences of identical or similar financial instruments, on different markets or in different forms. The ideal version is riskless arbitrage.
you can be long in nifty and short mini nifty....you can go long in bse and short in nse for intraday or can use futures contracts in nse....
Yet another way.Go LONG in one month futures and SHORT in
another month.
Reply With Quote
The Following User Says Thank You to columbus For This Useful Post:
SCION (21st February 2010)
  #6  
Old 21st February 2010, 12:03 PM
Member
 
Join Date: Jan 2010
Posts: 20
Thanks: 5
Thanked 12 Times in 8 Posts
lokesh1212 is on a distinguished road
Default Re: Simultaneous long and short in same stock

Or can we use 2 different trading accounts to accomplish the same?

Short in 1 account and long in another.
Reply With Quote
The Following 2 Users Say Thank You to lokesh1212 For This Useful Post:
columbus (21st February 2010), SCION (21st February 2010)
  #7  
Old 21st February 2010, 12:13 PM
Member
 
Join Date: Jul 2009
Posts: 696
Thanks: 1,096
Thanked 1,167 Times in 432 Posts
anuragmunjal has much to be proud ofanuragmunjal has much to be proud ofanuragmunjal has much to be proud ofanuragmunjal has much to be proud ofanuragmunjal has much to be proud ofanuragmunjal has much to be proud ofanuragmunjal has much to be proud ofanuragmunjal has much to be proud ofanuragmunjal has much to be proud of
Default Re: Simultaneous long and short in same stock

hi..
Some big operators are banned becos they are suspected of circular trading. this is when u buy large quantities (generally of a thinly traded stock) frm one termial and simultaneously sell frm another. this creates fictitious volumes in that particular stock and in case the floating stock of that particular company is less and u have the promoter of that copany in the nexus, u can play around with the price too. this fictitious increase in price and volume is done 2 attract the interest of general public in that particular stock and this is a very old practice.
as a retail investor , if u simultaneously buy and sell short the same stock, there are no laws against it. only ur net position is zero and u pay 2 way brokerage & other applicable charges.

regards

Anurag
Reply With Quote
The Following 2 Users Say Thank You to anuragmunjal For This Useful Post:
mrwindmill (21st February 2010), SCION (21st February 2010)
  #8  
Old 21st February 2010, 01:44 PM
Member
 
Join Date: Jan 2009
Posts: 6
Thanks: 6
Thanked 2 Times in 2 Posts
mrwindmill is on a distinguished road
Default Re: Simultaneous long and short in same stock

Quote:
Originally Posted by trader.trends View Post
In a single account you can either be long or short not both in spot segment.
Quote:
Originally Posted by anuragmunjal View Post
Some big operators are banned becos ..... this fictitious increase in price and volume is done 2 attract the interest of general public in that particular stock and this is a very old practice.
as a retail investor , if u simultaneously buy and sell short the same stock, there are no laws against it. only ur net position is zero and u pay 2 way brokerage & other applicable charges.

regards

Anurag
Thanks everyone for answering.

I guess anuragmunjal's answer is more or less on the lines of what I was expecting would be the case. It would be wonderful if someone can provide a link to some authoritative referenhce though.
BTW, I have done this thing 2-3 times in the past and at least there was nothing in the broker's (ICICIDirect-marginplus) system to stop the transactions. Of course my volumes wouldn't have moved even an ant, let alone the prices on a national stock exchange.

To trader.trends-- That is what should happen if such a law/rule was in place. Have you or someone else experienced it? That would clear things.

The FAQ of ICICIDirect spells out many rules regarding what you can do with "same scrip" but I could not find anything on this topic. [LINK] http://content.icicidirect.com/indexfaq.asp#a82 [/LINK]
Reply With Quote
The Following User Says Thank You to mrwindmill For This Useful Post:
anuragmunjal (21st February 2010)
  #9  
Old 21st February 2010, 07:18 PM
Member
 
Join Date: Jul 2009
Posts: 696
Thanks: 1,096
Thanked 1,167 Times in 432 Posts
anuragmunjal has much to be proud ofanuragmunjal has much to be proud ofanuragmunjal has much to be proud ofanuragmunjal has much to be proud ofanuragmunjal has much to be proud ofanuragmunjal has much to be proud ofanuragmunjal has much to be proud ofanuragmunjal has much to be proud ofanuragmunjal has much to be proud of
Default Re: Simultaneous long and short in same stock

hi.
If u r buying n selling in the same a/c, u r simply squaring off ur transaction,why would anybody have an issue with that.
take another scenario, u hold an A/c with 2 different brokers, u buy with one broker and his server goes down, u sell it in another a/c with some different broker. at an oppertune time u square off both the transactions. I have done it 100s of times, there is no law which stops u frm doing this till the time ur intentions are not of doing 'circular trading' as mentioned in the previous post .
or am I missing something here?
Reply With Quote
  #10  
Old 21st February 2010, 07:30 PM
columbus's Avatar
Member
 
Join Date: Mar 2008
Location: Hyderabad
Posts: 9,182
Thanks: 7,144
Thanked 15,009 Times in 6,231 Posts
columbus has a reputation beyond repute
columbus has a reputation beyond repute
Default Re: Simultaneous long and short in same stock

Quote:
Originally Posted by anuragmunjal View Post
hi.
If u r buying n selling in the same a/c, u r simply squaring off ur transaction,why would anybody have an issue with that.
take another scenario, u hold an A/c with 2 different brokers, u buy with one broker and his server goes down, u sell it in another a/c with some different broker. at an oppertune time u square off both the transactions. I have done it 100s of times, there is no law which stops u frm doing this till the time ur intentions are not of doing 'circular trading' as mentioned in the previous post .
or am I missing something here?
Perhaps the best option would be BUYING two lots of Nifty (50*2)
and SELLING five lots of Minifty (20*5) of same month.

Advertisements

Reply With Quote
The Following User Says Thank You to columbus For This Useful Post:
anuragmunjal (21st February 2010)
Reply

Bookmarks

Tags
intraday, legal, short selling


Advertise Here


Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off



All times are GMT +5.5. The time now is 01:12 PM.

Indemnity, Disclaimer & Disclosure Notice:
By visiting Traderji.com you automatically indicate that you agree to our Forum Rules, Indemnity, Disclaimer & Disclosure Notice and General Content Disclaimer Notice and indemnify Traderji.com, its associates and related parties of all claims howsoever resulting from the usage of the forum/site.
Disclaimer: Trading or investing in stocks & commodities is a high risk activity. Any action you choose to take in the markets is totally your own responsibility. You are recommended to make appropriate enquiries and seek appropriate advise before sending money, incurring any expenses, acting on recommendations or entering into any commitment in relation to any advertisement published here. Traderji.com does not vouch for any claims made by the advertisers of products and services. Traderji.com will not be held liable for any consequences in the event such claims are not honoured by the advertisers. Traderji.com will not be liable for any, direct or indirect, consequential or incidental damages or loss arising out of the use of any information by anybody mentioned anywhere on this site.
Disclosure: The information in this forum is neither an offer to sell nor solicitation to buy any of the securities mentioned herein. The writers may or may not be trading in the securities mentioned.
All names or products mentioned are trademarks or registered trademarks of their respective owners.
General Content Disclaimer Notice:
In light of our policy of encouraging candid, open exchanges of views and the rapid distribution of information originating from many sources, Traderji.com cannot determine the accuracy or legality of any information that may be uploaded to the forum. Opinions, advice and all other information expressed by participants in discussions are those of the author. You rely on such information at your own risk. You are urged to seek professional advice for specific, individual situations and not rely solely on advice or opinions given in the discussions. Since Traderji.com is an open and free discussion forum, any comments made by members of this forum in their posts reflect their own views and not of the owner or administrator of Traderji.com. Thus the owner/administrator indemnify themselves of all claims whatsoever and will not be liable or responsible for any members comments/views in this forum Traderji.com. Although we constantly delete all irrelevant content and/or SPAM, if you should find any objectionable or offensive posts made by members of this forum which you would like to bring to our notice for removal then please Contact Us.
 


Copyright © www.Traderji.com 2001 - , All rights reserved.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 166 167 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 185 186 187 188 189 190 191 192 193 194 195 196 197 198 199 200 201 202 203 204 205 206 207 208 209 210 211 212 213 214 215 216 217 218 219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245 246 247 248 249 250 251 252 253 254 255 256 257 258 259 260 261 262 263 264 265 266 267